Question 81 Chapter 2 of +2-A – T.S. Grewal 12 Class Part – A Vol. 1

Question 81 Chapter 2 of +2-A

Question 81 Chapter 2 of +2-A

81. A, B and C are partners sharing profits in the ratio of 5 : 4: 1. C is given a guarantee that his minimum share of profit in any given year would be at least 5,000. Deficiency, if any, would be borne by A and B equally. Profit for the year ended 31st March 2019 was 40,000.
Pass necessary Journal entries in the books of the firm.

The solution of Question 81 Chapter 2 of +2-A

:

Balance Sheet (for the year ended 31st March 2019)
Liabilities
Amount Assets
Amount
      By Profit and Loss A/c 40,000
To Profit Transferred to *2        
A’s Capital A/c 19,500      
B’s Capital A/c 15,500      
C’s Capital A/c 5,000 40,000    
    40,000     40,000

 

 


Working Note: –

Calculation of Actual Amount of Interest on A’s, B’s, & C’s Capital
Profit for 2018= 40,000
Profit-sharing ratio 5: 4: 1


Interest on A’s Capital 40,000 X 5
10

Interest on A’s Capital = 20,000/-

Interest on B’s Capital 40,000 X 4
10

Interest on B’s Capital = 16,000/-

Interest on C’s Capital = 40,000 X 1
10

Interest on C’s Capital = 4,000 /-

C’s Actual Profit Share i. e. Rs 4,000 is less than his Minimum Guaranteed Profit i. e. Rs 5,000
Deficiency in C’s Profit Share = = 5,000 − 4,000 = Rs 1,000
This deficiency is to be borne by A and B equally.
This deficiency of Rs 1,000 is to be borne by A and B equally.


A’s Share of Profit 1,000 X 1
2

A’s Share of Profit = 500

B’s Share of Profit 1,000 X 1
2

B’s Share of Profit= 500


Now, Final distributed among the partners

A’s Share of Profit = 20,000 500 =19,500
B’s Share of Profit = 16,000 500 =15,500
C’s Share of Profit = 4,000 + 1,000 =5,000

 

Also, Check out the solved question of previous Chapters: –

T.S. Grewal’s Double Entry Book Keeping +2 (Vol. I: Accounting for Not-for-Profit Organizations and Partnership Firms)

  • Chapter No. 1 – Financial Statement of Not-For-Profit Organisations
  • Chapter No. 2 – Accounting for Partnership Firms – Fundamentals
  • Chapter No. 3 – Goodwill: Nature and Valuation
  • Chapter No. 4 – Change in Profit-Sharing Ratio Among the Existing Partners
  • Chapter No. 5 – Admission of a Partner
  • Chapter No. 6 – Retirement/Death of a Partner
  • Chapter No. 7 – Dissolution of a Partnership Firm

T.S. Grewal’s Double Entry Book Keeping (Vol. II: Accounting for Companies)

T.S. Grewal’s Double Entry Book Keeping (Vol. II: Accounting for Companies)

  • Chapter No. 1 – Financial Statements of a Company
  • Chapter No. 2 – Financial Statement Analysis 
  • Chapter No. 3 – Tools of Financial Statement Analysis – Comparative Statements and Common- Size Statements
  • Chapter No. 4 – Accounting Ratios
  • Chapter No. 5 – Cash Flow Statement

 

Check out T.S. Grewal +2 Book 2020@ Official Website of Sultan Chand Publication

2 Book 1 min - Question 81 Chapter 2 of +2-A - T.S. Grewal 12 Class Part - A Vol. 1
Vol. I: Accounting for Not-for-Profit Organizations and Partnership Firms

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